Thursday, August 04, 2005

Free food at Google

Susan Wojcicki posts on the Google blog about the free food at the Google cafe. Sounds yummy.

I've often wondered why more tech companies don't have free food at their cafes. It seems to me that the math works out easily.

For example, when I was at Amazon.com, I remember being frustrated by waits as long as 10-15 minutes to pay for food at the Cafe. That means it costs the company $17-25 (assuming tech geeks have fully loaded costs of ~$200k/year, so $100/hour) to wait in line to pay for a $5-10 lunch. At least when the lines are long, it would have been cheaper for the company to give the food away for free than to pay for that lost time.

But, lost time aside, this benefit just isn't that expensive. If it costs $5-10 to provide lunch, that's $1250-2500 per year (5 days/week * 50 weeks/year * $5-10). Compared to costs (compensation, hiring, etc.) for tech geeks, this is a modest expense, equivalent to perhaps a 1-2% raise or a modest improvement in retention or productivity.

So why not just give people a raise? As Baron & Kreps point out in their book Strategic Human Resources, perks can be seen as a gift exchange, having an impact on morale and motivation disproportionate to their cost. Perks work better than cash.

Having the best perks in the industry magnifies this effect and likely is part of why Google has been so successful in poaching from other firms while avoiding losses themselves.

Investing in your people pays for itself. There are places to be frugal with money, but this is not one of them.

I totally agree with you... there's something about getting free food from your company that makes you really feel loved and trusted. Not only did it save time standing in line, I got to the point where I just didn't go grocery shopping or cook anymore... outcome was that I was basically at work all the time I was awake on weekdays and sometimes on weekends. I interned there in the summer, and all along I said we must be the most spoiled people on the planet. It was wonderful.